Albertsons receives a boost ahead of its IPO
Albertsons announced on Wednesday that funds managed by Apollo agreed to purchase $1.75B of convertible preferred stock. Apollo would own 17.5% of the shares on an as-converted basis. Albertsons had to pull both previous attempts to return to the public markets in 2015 and 2018. Two months ago, it filed a registration statement to try again. This time market conditions should be more receptive to supermarkets and retailers that sell groceries, seeing a boost in sales from the shift to at-home meal consumption. Apollo has a long history in the supermarket sector and is currently invested in The Fresh Market and Smart and Final. Apollo was also the controlling owner of Sprouts before recently selling its stake. Apollo appears to be getting an attractive valuation at less than 6x forward EBITDA projections before the pandemic. The assets are also quite different than when Albertsons went private 14 years ago. For one, it is either #1 or #2 in share in 82 of 121 MSA in which it operates. If public shareholders are offered a similar entry point, the third time could very well be the charm.
Hard seltzer expansion continues (SAM)
Hard seltzer sales grew 334% for the week ended May 9. To keep up with the meteoric growth category leader Mark Anthony is building two new plants. The company recently posted a job listing for a new head brewer at its Newark, NJ facility that is under construction, indicating completion is nearing. Mark Anthony’s White Claw and Samuel Adams’ Truly account for 70% of the hard seltzer category. Bud Light’s seltzer, which was launched in the first quarter, is a distant third.
DIY eggs are a sign of extreme quarantine (CALM)
Purveyors of live chicks, coops, and feed have seen sales jump by more than 500% during the quarantine period. With corn prices at a low, more time at home, and egg prices spiking in April (the largest increase in the CPI food report) now would seem to be a great time to raise your chickens. Traci Torres, the owner of My Pet Chicken, a hatchery in Monroe, CT, said that during the 1st week of March, sales were down 2% YOY, but by the 4th-week sales had increased to 500%+. “We have maintained that through April. Things have started to slow down, but only because there’s nothing left to sell.” Maybe your interest is in environmental sustainability or teaching children about animals and food, or you prefer the taste of “freggs” (fresh eggs in industry-speak). Still, the savings probably does not offset the time for most of us (including cleaning up after the birds). It costs about $35 a month to keep six chickens fed and bedded. The start-up costs are also not insignificant, as seen below. In comparison, a flock of six chickens will produce about 15 dozens each month while conventional eggs at the supermarket are priced between $2-3 a dozen.
Howard Penney
Daniel Biolsi
